Usage-Based Insurance Market to Grow at CAGR of 22% through 2033; Dynamic Risk Assessment, Personalized Plans, Cost Savings, Regions Analysis & Business Opportunities

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The global usage-based insurance market size is anticipated to grow from USD 30 billion to USD 219.13 billion in 10 years. The market will experience rapid growth due to technological advancements in telematics during the forecast period.

Newark, April 08, 2024 (GLOBE NEWSWIRE) — The Brainy Insights estimates that the USD 30 billion in 2023 global usage-based insurance market will reach USD 219.13 billion in 2033. Telematics technology is used by Usage-Based Insurance (UBI) to track individual driving habits. This method uses real-time data collected from vehicles to determine the parameters for auto insurance. A lot of information, including speed, distance travelled, braking habits, and time of day, is tracked by telematic devices or smartphone apps.

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Insurance companies can customize rates to a driver’s real driving behaviour by using telematics and gathering this kind of data, which provides insights into the driver’s behaviours and permits a dynamic risk assessment. Based on this study, premiums are modified to promote fairer pricing that accurately represents risk, as opposed to standard insurance techniques that take age and gender into account as broad demographic data. By rewarding drivers who drive responsibly with reduced rates, the intention is to encourage safer driving practices. Because UBI is personalized, it is possible to customize insurance coverage for people based on their driving behaviours. UBI provides cost savings. It promotes safer driving practices, lowering accident rates and raising road safety standards.

Key Insight of the Global Usage-based Insurance Market

North America will dominate the market during the forecast period.

The region’s industry supremacy is due to its well-established, well-known, competitive, and comprehensive insurance market. Consumer knowledge about the programme also influences the growing acceptance of universal basic income (UBI) in North America. The benefits of universal basic income have been effectively disseminated through marketing efforts and educational initiatives, thereby expanding the market. North America has a strong telematics infrastructure, which encourages market expansion. In North America, the regulatory landscape has typically favoured UBI efforts. Customers are additionally encouraged to drive safely by discounts and incentives offered by UBI programmes, which adds to the appeal of this insurance model.

In 2023, the pay-as-you-drive (PAYD) segment dominated the market with the largest market share of 42% and revenue of 12.60 billion.

The product type segment is divided into pay-as-you-drive (PAYD), pay-how-you-drive (PHYD), manage-how-you-drive (MHYD) and others. In 2023, the pay-as-you-drive (PAYD) segment dominated the market with the largest market share of 42% and revenue of 12.60 billion.

In 2023, the smartphone segment dominated the market with the largest market share of 47% and revenue of 14.10 billion.

The technology segment is divided into on-board diagnostics, smartphone, hybrid, black box and others. In 2023, the smartphone segment dominated the market with the largest market share of 47% and revenue of 14.10 billion.

In 2023, the passenger segment dominated the market with the largest market share of 68% and revenue of 20.40 billion.

The vehicle type segment is divided into passenger and commercial. In 2023, the passenger segment dominated the market with the largest market share of 68% and revenue of 20.40 billion.

Report coverage & details:

Report Coverage Details
Forecast Period 2024–2033
Base Year 2023
Market Size in 2023 $ 30 Billion
Market Size in 2033 $ 219.13 Billion
CAGR 22%
No. of Pages in Report 236
Segments covered by Product Type, Technology, Vehicle Type, Regions
Drivers The increasing awareness about usage-based insurance
Opportunities Technological advancements
Restraints The complexity of calculating the UBI

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Advancement in Market

For eC3 consumers, Citroen India and ICICI Lombard General Insurance unveiled the novel and distinctive usage-based insurance (UBI). Through this programme, consumers who practise safe driving will receive discounts on their insurance premiums. The UBI programme is linked to the vehicle’s use and the driver’s driving habits during the insurance term. The insurance company evaluates the driving scores and uses that information to compute the renewal premium. Real-time vehicle/driving dynamics data collection is permitted with the consumer’s consent. After that, this calculates the owner’s unique renewal premium and score drivers.

Market Dynamics

Driver: Growing knowledge regarding usage-based insurance.

The demand for usage-based insurance (UBI) is rising due to consumer awareness and education. Insurers are actively promoting usage-based insurance plans to customers and emphasizing their advantages. They emphasise the benefits of safe driving and how it may result in financial savings, which strengthens the case for usage-based insurance among customers as opposed to traditional insurance. The expansion of the market is facilitated by the streamlined procedure and improved availability of usage-based insurance. Thus, the market will rise due to increased knowledge of usage-based insurance.

Restraints: The difficulty in determining the UBI.

The market’s expansion will be hampered by the intricacy of UBI models and its reliance on cutting-edge telematics technologies. Customers choose the simpler traditional usage-based insurance because they are unaware of it or find it difficult to explain how it operates. Data accuracy and reliability are a worry, given our reliance on technology. Telematics devices are susceptible to technical issues or malfunctions, and environmental conditions that alter GPS signals might introduce mistakes when measuring driving behaviours. Privacy concerns also contribute to consumers’ mistrust of telematics and data collection. The development and uptake of usage-based insurance in the market are further restricted by concerns about insurers’ transparency and handling of this private data.

Opportunities: Technological Progress.

Technological developments in telematics and data-driven insights are driving the global expansion of the usage-based insurance sector. Implementing UBI in the market is propelled by the development of efficient processes made possible by telematics, improving user experiences. Furthermore, telematics supports environmentally friendly activities by tracking fuel efficiency and motivating drivers to improve their driving practices to attain or maintain fuel economy. The heightened emphasis on sustainability corresponds with customer inclinations towards eco-friendly practices, promoting further technological progress in the industry.

Challenges: Regulatory guidelines.

The diverse nature of data protection and privacy laws across regions leads to mismatch and overlapping of regulation regarding insurance coverage. Navigating such complex procedures is difficult for insurance providers and users to understand. Obtaining regulatory approval for UBI programs can be time-consuming. Achieving standardization in UBI regulations is another significant market growth challenge.

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Some of the major players operating in the global usage-based insurance market are:

• Allianz S.E.
• Allstate Corporation
• Aviva Life Insurance
• AXA
• Insurethebox
• Liberty Mutual Insurance Company
• Mapfre S.A.
• Nationwide Mutual Insurance Company
• Progressive Casualty Insurance Company
• UNIPOLSAI ASSICURAZIONI S.P.A

Key Segments covered in the market:

By Product Type

• Pay-As-You-Drive (PAYD)
• Pay-How-You-Drive (PHYD)
• Manage-How-You-Drive (MHYD)
• Others

By Technology

• On-Board Diagnostics
• Smartphone
• Hybrid
• Black Box
• Others

By Vehicle Type

• Passenger
• Commercial

By Region

• North America (U.S., Canada, Mexico)
• Europe (Germany, France, the U.K., Italy, Spain, Rest of Europe)
• Asia-Pacific (China, Japan, India, Rest of APAC)
• South America (Brazil and the Rest of South America)
• The Middle East and Africa (UAE, South Africa, Rest of MEA)

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About the report:

The market is analyzed based on value (USD Billion). All the segments have been analyzed on a worldwide, regional, and country basis. The study includes the analysis of more than 30 countries for each part. The report analyses driving factors, opportunities, restraints, and challenges to gain critical market insight. The study includes Porter’s five forces model, attractiveness analysis, Product analysis, supply and demand analysis, competitor position grid analysis, distribution, and marketing channels analysis.

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The Brainy Insights is a market research company, aimed at providing actionable insights through data analytics to companies to improve their business acumen. We have a robust forecasting and estimation model to meet the clients’ objectives of high-quality output within a short span of time. We provide both customized (clients’ specific) and syndicate reports. Our repository of syndicate reports is diverse across all the categories and sub-categories across domains. Our customized solutions are tailored to meet the clients’ requirement whether they are looking to expand or planning to launch a new product in the global market.

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